The tax changes of the last few years makes me think about Boston. I visited this historic city recently and, while overlooking its beautiful harbor, my mind wandered to a different time. I thought about Sam Adams and 150 other patriots masquerading as Mohawk Indians boarding three ships, breaking open the cargo of tea and heaving it all overboard. I imagined how that harbor might have looked as Boston’s first community teapot. What did they achieve? As the electrifying news of the “Boston Tea Party” spread, other seaports followed their example and men of action staged their own acts of resistance against excessive taxes.
Will taxes go away? Absolutely not, although most citizens agree that an overhaul of our overly complex tax system is overdue. Perhaps Mr. Trump will spearhead that. However, until that happens, it is up to each of us to take control of our own tax destiny and enact our own Personal Tax Revolution. Let me suggest the best way to begin.
Get a Second Opinion to Capture Tax Savings
We have all learned from childhood that it is prudent to get a second opinion if we are diagnosed with a serious illness. We want to verify its existence and learn the most appropriate course of treatment to become well again. Wouldn’t you agree that paying more taxes than is really required is a serious threat to your financial health? A Second Opinion Tax Diagnosis will help you discover what you can do to pay less income tax, recoup taxes that you may have already paid and hasten your own personal Tax Freedom Day.
If, for example, you own apartments or other investment property, you are a strong candidate to tap into a very exciting area of tax law called cost segregation. This allows you to reclassify a wide range of building improvements on these properties. Doing this lets you lawfully re-characterize the depreciation on qualified components of the property and capture instant tax benefits, resulting in tax-free cash flow that goes directly into your pocket.
You may be able to use these benefits to eliminate your taxes for 2016 and even go back previous years to retrieve taxes you had unnecessarily paid. A client who was recently referred to me, for example, had sold rental property in 2015, triggering $100,000 in capital gains taxes. Implementing cost segregation let her go back and recapture $72,000 of those capital gains taxes.
Or, if you own a business—whether as a C or S corporation, partnership, LLC or sole proprietorship—significant tax savings are likely to be found. If you are self-employed earning $150,000 or more of income and filing a Schedule C, for instance, it is probable that you can save $10,000 or more in taxes each year by applying less well-known elements of our overly complex tax code.